Transportation Industry Updates October 2018

Every month we take a look at the most recent transportation industry trends to help plan for the future. Discover the trends and updates for October 2018.U.S. Trucking

The American Trucking Association’s seasonally adjusted Truck Tonnage Index increased 4.4% year over year in August, which is the 16th consecutive month of growth. The growth rate did slow from last month’s 8.6% year-over-year growth. As a three-month moving average, tonnage was up 6.9% in August. Year-to-date tonnage growth slowed to 7.6%, down from 8% in July, which is still faster than last year’s 3.8% growth rate.

Average truckload rates were up 11% year over year in August despite sliding spot market truckload rates, which were likely due in part to refreshed contract rates allowing shippers to exit the spot market. Contract rates in 2018 were up 8-11% year over year for dry-van and 10-15% in flatbed, and initial expectations are for 5% rate increases in 2019.

Global Airfreight, Containerized Ocean TrafficTotal U.S. container imports were up 8.4% year over year in September, but absolute volumes were below their July peak. Year-to-date imports are up 6% year over year. Third quarter import volumes were up 6.4% resulting from a modest organic growth and a tariff-related pull forward. Volumes appear to have peaked in July. With trade tariffs pending, there is risk for additional pull-forward of shipments, which could lead to deceleration in the fourth quarter of 2018 or first quarter of 2019.

During September, spot market ocean rates from Hong Kong to the U.S. West Coast remained at multi-year highs. Key drivers were recent capacity reductions and strong volume. Our work indicates 2018 contract rates of $1,000 and $1,200 continue to secure capacity for existing prices, while anything above allocation is being priced on the spot market. Spot market rates are expected to be at peak levels, but will begin to fall in the start of the fourth quarter as the long-term market oversupply dynamic has not changed.

Airfreight rates in August were slightly higher than year-ago and month-ago periods. Airfreight rates are expected to remain higher through 2018 as more capacity has been proactively locked into contract agreements due to capacity constraints, while underlying pricing power appears limited by slowing demand growth.